Is tax sale investing right for me? That is a question you should be asking yourself before you begin investing in tax properties at auctions. Investing can be risky and isn’t for everyone. Here are a few things to consider before you start investing in tax deeds or tax liens.
Do you have time to put into researching properties?
It can take several hours to do proper research for one property. Are you committed to spending that much time finding, researching, and purchasing properties at tax auctions? Not all properties will take hours depending on availability of the information. If you can find all the information on the Internet then the time could be cut significantly.
Along with the time it will require to research the properties comes the time it will take to make money from the property. If you are purchasing a tax deed, you will need to sell the property or rent it before you make money. If you are buying a tax lien, the owner has to pay off the lien or you have to foreclose before you make money. It will take patience and doesn’t happen overnight. This is not a get rich quick strategy.
Do you have the necessary funds?
Purchasing tax deeds or tax liens requires money. Do you have the money you need not only to pay your bid amount, but also transfer fees and any other fees the auction requires? If you plan to travel you will also need funds set aside for airfare, car rental, food, etc. If there are association fees or you are borrowing money, you will need to have funds to cover carrying costs if applicable.
What is your exit strategy?
Before you purchase a property you will need to know what you will do with it. You always need an exit strategy before you enter. It is similar to a maze. If you are trying to find your way through a maze, you need to know where the exit is located so you can better make your way in that direction.
And the most important question…
Why do you want to invest in Tax Properties?
This question is important, because if the answer is “because I want to make a lot of money” you probably won’t succeed with tax sales. If you want to have the freedom to spend more time with your family or you want a better life than you have now, you might do well with tax sales. It all depends on how bad you want it and why you want it.
Answer these questions and see if it is something you can do. It is possible for you to do it, but are you truly willing to put in the time and money it will take to be successful.
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